Ex-Fidelity employee loses 10-year whistle-blower case
A former Fidelity Investments executive lost her decadelong fight against the Boston mutual fund giant when a jury in federal court Tuesday found she had not been pushed out of her job for alleging accounting fraud.
The jurors, who also determined that Jackie Lawson did not qualify as a whistle-blower under federal law, returned the verdict after one day of deliberations.
In her lawsuit, Lawson alleged that she faced harassment and retaliation after she accused Fidelity of using accounting methods that led to charging millions of dollars in excessive fees to fund shareholders. She reported the conduct to federal authorities and sought whistle-blower protection under the Sarbanes-Oxley Act, a law passed after the 2002 Enron scandal to prevent financial fraud.
Fidelity had fought Lawson’s lawsuit, arguing Sarbanes-Oxley did not apply to private companies. In 2014, the US Supreme Court sided with Lawson, saying that the mutual fund firm is covered by that law.
Faced with a hostile work environment, Lawson claimed she had no choice but to resign in 2007. On the stand, she testified that her bosses were “treating me like an animal” after she reported the accounting problems. Her suit contended that as a whistle-blower she was entitled to millions of dollars in back pay and other damages. Lawson, who was a senior director of finance, has been unable to find a job since she left Fidelity.
“We’re extremely disappointed, and it is an unfortunate verdict because it will undoubtedly chill any number of employees in settings similar to Jackie Lawson’s from coming forward and expressing their concerns about practices that they truly believe are unlawful,” said Laura Studen, Lawson’s lawyer.
Studen said her client respects the jury’s verdict but will assess whether to appeal.
At the three-week trial, Fidelity denied retaliating against Lawson and argued that the accounting errors she detected were ones the company was already aware of and had corrected.
“The jury found, as Fidelity has stated all along, that no reasonable person could believe that Fidelity violated the law protecting mutual fund shareholders from fraud,” Fidelity spokesman Vin Loporchio said in a statement.
Loporchio went on to point out that Fidelity has long offered employees a number of channels to report potential issues, including ethical concerns. The company encourages employees to make use of these channels, such as calling a confidential phone line.
The case offered a rare window into the inner workings of Fidelity, which manages the retirement savings accounts of some 25 million Americans. It also came at a time when the company’s culture has been under scrutiny following recent high-profile departures of two fund managers accused of sexual harassment. Fidelity chief executive Abby Johnson vowed she would enforce a zero tolerance policy on harassment.